Covered Call Calculator
Income from selling calls against stock you own, with the annualized yield and the upside you give up in exchange.
Profit and loss at expiration
Annualized figures assume the same trade repeats at the same premium all year. Use them to compare candidate trades, not as an income forecast.
A covered call sells someone the right to buy your shares at the strike price. You keep the premium no matter what. If the stock finishes above the strike your shares are called away, capping the gain; below it, the call expires and you can sell another.
Frequently asked questions
Do I need 100 shares?
Yes. One contract obligates you to deliver 100 shares, so the position is only covered if you own at least 100 shares per contract. Selling without the shares is a naked call, which carries unlimited risk.
What strike should I choose?
Delta approximates the chance of assignment, so a 0.30 delta call has roughly a 30% chance of your shares being called away. The practical test is simpler: pick a strike you would be genuinely happy to sell at, because you might have to.
Does a covered call protect me if the stock drops?
Only by the premium collected. If you sell a call for $1.50 on a $50 stock, you are protected for the first 3% of decline and fully exposed after that. It is a small discount on an unchanged downside, not a hedge.
What happens if the stock jumps well above the strike?
Your shares are sold at the strike and you keep the premium, but you miss everything above it. This is the real cost of the strategy, and it hurts most on the positions you most wanted to hold.
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Calculators model hypothetical outcomes from the inputs you provide. They are informational only, not financial, investment, tax, or legal advice.